Thursday, January 15, 2009

Maintain Your Monthly Plan

There's a couple really simple things I do to stay on top of our monthly spending plan (see "Make a Monthly Spending Plan" below). Here's a few easy tips to stay organized and on track.

1. Put All Your Bills in One Place

As soon as we get a bill, I open it and write the amount due and the due date on the outside of the envelope. Then I immediately put it on my desk so all the bills stay together in one place.

2. Pay Your Bills on Time

It's crucial to pay the bills on time to avoid late fees, which can really add up. So as soon as we get paid, I pay the bills first--before we buy or do anything else. If cash flow is an issue, make yourself a little calendar so that you know when your paychecks come in and when each bill needs to go out--you can note this on the envelopes as well.

3. Use Weekly Cash Envelopes for Daily Expenses

This is probably the single best thing we've done to get a handle on our spending. I use the month's spending plan to figure out what we need for groceries and any other categories we can pay for in cash (gas, entertainment, laundry, lunch, etc). Then I put the cash for each week in an envelope.

Not only is this simple, but it keeps us to our plan. It's far too easy to walk into the grocery store with a debit card and over-spend for the week--especially if you're hungry when you shop. But if you only have $65 when you walk into the store with a store list, you're only going to spend $65--trust me.

Let me know if you've found any tips or tricks that help you handle your spending each month. I look forward to hearing from you!

Wednesday, January 14, 2009

Principle #4: Make a Monthly Spending Plan

So I kept track of my spending for thirty days.

Broken Piggy Bank by Veronika Nagy.

At the end of the month, I tallied up my numbers into categories. I used the following list (which I've only slightly revised 13 years later) from the non-profit credit counseling service I went to, and found it helpful and pretty thorough. Feel free to delete categories you don't need or add categories that aren't already on the list.

Two points: (1) This is a monthly expenses worksheet. So if you spend about $250 on holiday gifts in December, divide $250 by 12 months and enter $21 for holiday gifts in the appropriate place. Do the same for any annual/semi-annual expense, such as car license/registration or eye exam/teeth cleaning. (2) At the time, I used another worksheet to calculate my debt repayment from a list of all my debts. However, I've included a line entry for minimum credit card payment because that may be one of your basic monthly expenses if, like most of us, you have some credit card debt.

Okay, so here's the list:

Basic Living Expenses


1. Rent/Mortgage
2. Oil
3. Gas/Electric
4. Water/Sewer
5. Garbage pick-up
6. Basic Telephone
7. Basic Cable
8. Property Taxes
9. Property/Renters Insurance
10. Maintenance


11. Groceries (incl. cleaning supplies and paper goods)
12. Lunches (work and school)
13. Pet food and litter

Dependent/Child Care

14. Alimony & Child Support
15. Babysitter/Day care


16. Car payment(s)
17. Gasoline
18. Car maintenance/repairs
19. License/registration
20. Car insurance
21. Parking
22. Commuting costs


23. Insurance Premium/Deductible
24. Doctor/Therapist/Optometrist
25. Dentist
26. Prescriptions/Medications


27. Life/(whole/term)


28. Family Clothes
29. Uniforms (work/school)
30. Laundry/Dry Cleaning


31. Educational Debt


32. IRS or other
33. Fines, tickets, etc.
34. Credit card minimum monthly payment(s)
35. Any other

Subtotal of Basic Living Expenses: _____________

Non-Basic Expenses

A. Tuition
B. Hair Care/Cosmetics/Toiletries
C. Cell phone
D. Books/Newspapers/Magazines/Subscriptions
E. Tobacco
F. Liquor/Beer/Wine/Soda
G. Movies/Concerts/Plays/Videos/DVDs
H. Dinners Out
I. Dues/Memberships
J. Donations (religious/charity)
K. Gifts (birthdays/holidays)
L. Children’s allowance
M. Pet care/veterinary
N. Lottery
O. Hobbies/Lessons
P. Vacations
Q. Other (in my case, I had bank fees and had used an accountant to help me with my taxes in this particular year)

Subtotal of Non-Basic Expenses: __________

Total Monthly Expenses (Basic + Non-Basic): ____________

Total Monthly Income: _______________
Total Monthly Expenses: _______________
Monthly Excess/Deficit (Monthly Income minus Monthly Expenses): _______________

Be sure that your monthly income is based on what actually comes in -- not on what you think you might make. Be honest--both about what you spend and about what you earn. Once you are totally honest with yourself, everything else begins to fall into place.

At the O'Kitten household, we've been using the same basic format for about six years now. This month, our plan looks like this:

1/14 - 2/10/09 [I put in the dates so that we know exactly the period the plan covers]

Rent/Utilities (total 954.86):

Rent: 722.11
Electric: 65.00
Gas: 15.00
Phone/cable/internet bundle: 135.00
Renter's insurance: 17.75

Medical (total 290.00):

Medication: 140.00
Therapist/Doctor Co-pays: 150.00

Grocery (total 280.00):

4 weeks at $65/wk: 260.00
Cat food and litter: 20.00

Other (total 282.00):

Transportation/Metro Card: 20.00
Debt repayment: 262.00

Total expenses: 1806.86

Total income: 1814.00
Total expenses: 1806.86
Monthly income minus monthly expenses = 7.14

And remember--it's just money. A lot of days I have had to repeat to myself: "For today, I have everything I need." Try not to fret over the past or worry about the future, but stay in today.

Drawing by Jim Doran.

Monday, January 12, 2009

Keep Track for 30 Days

Happy New Year and welcome back to the Money Shot! Here's a great way to start off the year, plus two resources full of helpful info to start 2009 off right.

Principle #3: Keep Track of What You Spend for 30 Days

Get a pocket-sized notebook and carry it with you everywhere you go for 30 days. Keep meticulous track (yep, to the penny) of everything you spend each day for thirty days. Whether you pay cash, charge, or buy online, write the amount down in your notebook the moment you spend it. (If you don't do it immediately, you may forget.)

For now, don't worry about what you're going to do with this information--just make the list each day. Soon it will be clear how useful it is.

First, it will give you an idea of exactly how and where you spend your money. Secondly, you will be able to see your spending categories and the amount you spend in each category. Finally, you will understand where your money goes in a month.

Mrspao mentioned she had done this and found it helpful. When I did it, it gave me a real sense of empowerment as I'd always lived check to check and had never been able to answer that monthly and perpetual question, "Where does the money go?"

This one-month exercise gave me the tools--and the precise information--I needed to regain control of my finances. In this case, knowing was more than half the battle, and in just a few seconds a day, I had a very powerful instument with which to tackle my seemingly overwheming financial fears: the instrument of knowledge.

A Good Book

The 30-day spending record as described above comes from a book I used when I was first addressing my debt and spending issues. Titled How to Get Out of Debt, Stay Out of Debt, and Live Prosperously, I highly recommend it to anyone who has debt, spending challenges, or is interested in viewing their finances in a more positive light. Available in paperback new or used on Amazon for virutally free.

A Free Book

Suze Orman's 2009 Action Plan is available for free download through 11:59 p.m. CT on Thursday, January 15, 2009. It has really helpful, straight-forward, step-by-step information for tackling your credit-card debt, starting a savings program, and basically just dealing with finances in our 2009 economy. Also available in your local bookstore (or on Amazon), but if you hit the link before January 15 you can get it for free--it's 200+ pages of info.

Monday, November 3, 2008

Plastic Attack

Principle #2: Use Cash

I know what you're saying: cash is old-fashioned. You get points and rewards and all kinds of cool stuff when you use your credit cards. Someone might even steal your cash. Television commericials actually try to convince you that you can hold up entire lines of people when you don't use your cool, modern, swipeable plastic cards.

But what does it really cost you to use plastic?

If you're like me, you used your credit cards responsibly for awhile. You paid off the balance in full and on time. This, I eventually realized, made me a lousy customer in the eyes of my creditors. They kept extending my credit lines. It didn't matter that my job situation hadn't changed--I was still making the same $20,000 a year as always. But suddenly it wasn't $2,000 of credit I had, it was $5,000. Then $10,000. I hadn't even asked for it. (This was in the early 1990s. Now they probably wouldn't even care whether I had a job or not.)

Yay, me! So much credit! And then...something happened. I started using that credit--more than I could pay back in a month. Now I was a good customer for those credit card companies, because suddenly those low introductory rates vanished, my interest was high, and I could barely pay the minimum I owed each month. Now they were making some money on me.

The more I owed, the more I despaired. And the more I spent. Once I owed more on my cards than I could imagine paying back, it didn't matter to me anymore how much I spent. I had lost control, seemingly without even realizing it. So I maxed out one card. And then another. Eventually, I owed more than I made in a year. Quickly it became an absolute financial and emotional disaster.

I didn't stop using my credit cards by choice. In 1996 I was forced (as you might imagine) to stop using credit altogether. (In another post I'll talk about what I had to do about all the debt I was in.) And I suddenly found myself terrified to go out of the house without the plastic. I mean--what if there was an emergency?

In thirteen years, I can assure you that I have never had an emergency that required a credit card. Never. Not in a car, not on public transportation, not in the city, not in the country. Not while driving or walking or travelling at home or abroad. Not once.

I'm also more cautious with cash than with credit (or even my debit) cards. Somehow, I think more carefully before spending actual dollars than I ever did swiping that card and just signing on the dotted line.

So what to do about the Plastic Attack?

1. Leave the plastic at home. ALL of it--every single credit card, and your debit cards, too.

2. Use cash. Only cash, every time, all the time. You'll never spend more than you have, and you'll more carefully consider how you spend it.

3. Make a list, and take only the cash you need for what's on the list for your daily shopping. If you worry about carrying too much cash on you, this is also the best strategy.

4. "What if there's an emergency?" In my personal experience, the "possible emergency" is no excuse to carry plastic. (Be honest with yourself. What emergency are you worried about--an amazing bargain you can't resist?) In this age of cell phones, this seems an even flimsier argument. But if you're really panic-stricken, put an envelope in your car with just enough money (or a pre-paid debit card) for a tow in it (say, $100) and leave it there. Now forget about it. It is for Emergencies Only.

5. Consider cutting up your credit cards. Yes, really. And don't forget to delete your info from all the places on the internet that also have your credit card information--Amazon, eBay, that amazing yarn shop you like to order from--to name a possible few. You don't get to keep using the card number after you cut up the physical card!

As ozkatt mentioned on October 25, a good financial advisor suggested cutting up her credit cards--and she did, even though it was painful. This makes sound financial sense. If you don't have it, don't spend it--which is really the whole point of this blog. And one of the best ways to do this is to leave the plastic behind and use cold, hard cash.

Sunday, October 26, 2008

Therapy for Retail Therapy

Knowing Your Poison, Part 2

Not everyone has an addictive personality. Sometimes it’s just a bit of a weakness for, say, shoes, handbags, or bargain-hunting. But whatever it is, it’s healthy to be aware of it.

If, however, you do find you’re spending in an addictive way in an unhealthy area and you want to look into getting some help, I myself found one particular 12-step program to be invaluable--and free! Here’s a list of 12-step groups, and there are said to be over 100 different ones now.

There’s even a Debtor’s Anonymous which helped friends of mine tremendously. I feel like I’d be remiss not to mention these programs, because I found support, solace, and community there. You probably don’t need one, but if you ever do, just know that they are there. Look them up online or in your phone book and reach out.

A Bit of Therapy for Retail Therapy

Now, on to Retail Therapy, which can feel quite therapeutic at the time but isn’t really therapy, and can ultimately cost way more than therapy.

I found that even though I never had much disposable income I did three rather compulsive things when shopping.

1. One-for-you, two-for-me. If I was buying gifts, for Christmas or whatever, and I was in a store spending money, I’d have my credit card out and I’d buy one for you and two (or three...) for me. It was as if once I got started, I couldn’t stop.

2. The bargain-binge. I’d buy stuff just because it was cheap. Even if it didn’t fit particularly well or I didn’t like the colour—hey, it was a bargain.

3. The grocery-grab-all. I couldn’t buy only one of something, especially if it was on sale. If one box of Cheerios was 10 cents off, I’d snatch up two or three of them, even if I couldn’t possibly use them all before the expiration dates.

Here are a few remedies I use now for each of these:

1. One-for-you. When buying gifts, make a list of exactly what you’re going to look for and note what you’ll spend for each item. Leave the credit (and debit) cards at home and take only the amount of cash you need. If you can afford it, allow yourself a few extra dollars to buy yourself something, or, move on to number two…

2. The tuck-away. It never occurred to me that if I’d avoided doing the bargain-binge a few times, I actually could’ve saved up to buy myself something nice, something I actually wanted or needed. Take an envelope and put $5 or $10 in it each week. Save that money for a few months and then buy yourself a quality item you really do want.

3. Get a plan. Make a grocery list and stick to it. Don’t impulse buy and don’t shop when you’re hungry. Again, leave your credit and debit cards at home and take only the cash you need to do your shopping. If you reach for more than one of an item, evaluate to make sure you really need more than one.

Next time: Overcoming the fear of leaving the plastic behind.

Saturday, October 25, 2008

Principle #1: Know Your Poison

Know Your Poison

I have an addictive personality. When I sought help for this problem back in 1996, I was told that addiction is "a disease of more." For a lot of us, there is something that always leaves us wanting more, whether it's chocolate, alcohol, gambling, sex, playing the lotto, online gaming, pills, drugs, online chatrooms, Blythe dolls, driving too fast, shoes, Häagen-Dazs or plain old shopping.

You know the thing -- you get excited thinking about doing the thing, and during the preparation for the thing. It gets your endorphins going a bit, and doing the thing itself helps you let go of the worries, concerns, and anxieties of your day-to-day life. You lose yourself in it for awhile--just a little while.

Whether the thing is a healthy escape (or at least not terribly harmful) is usually apparent afterward, when it's possible for guilt, shame and remorse to set in.

Not sure? Ask yourself these questions (yes, they are hard!) and answer honestly.

1. Does the thing impact your mental, emotional, physical, or financial health in negative ways?
3. Do you ever hide the extent of this activity from other people?
2. Is it making your life unmanageable?

I anticipate that as economic times get harder, more and more of us are going to turn to our activities of choice for comfort, to dull the pain of economic reality and the hard times we're facing. Of course, this will likely make our own economic realities harder.

I know, because I've done it. Back in 1995 I had buried myself in a 'drug of choice' hole that was so deep -- financially, emotionally, mentally, and physically -- that it was unimaginable that I'd ever be able to crawl (much less climb) out of it.

Hence we begin the journey of this blog. Most importantly, today:
1. I keep "the disease of more" at bay,
2. I live within my means, and
3. I am free of the fear of financial insecurity.

Next I'll begin sharing with you the concrete things I've done to achieve those three vital accomplishments.

Don't worry, this isn't a blog just for addicts, alcoholics, shopoholics, or any other kind of -ics! It's just good to know what your weakness(es) are when you begin to look at your spending patterns--if you have any weaknesses, and I'm certainly not suggesting that all of us do. But remember that when it comes to money, it's not just what you spend your money on, but when and how you spend, because many of us can be emotionally-driven spenders, at times, without even realizing it. Much more on this to come!

Next time: Therapy for retail therapy.

Friday, October 24, 2008

Welcome to the Money Shot

Many of you know me as Obsidian Kitten, and I now welcome you to this side project, which I have decided to call The Money Shot. With the rollercoastering economy (what, you hadn't noticed?) it occurs to me to share some of my experiences (for better and for worse) garnered during twenty years of living on a financial shoestring.

Look. I graduated magna cum laude from Yale, so you'd think I'd have top-notch earning potential. What I seem to have instead is top-notch resourcefulness potential. (Here's a list of jobs I've had, just to dazzle you with the bizarre variety of ways I've earned money.)

The past two decades have involved a great deal of trial and error (probably more of the latter) but a few lessons learned -- because somehow I've managed to survive the NYC economy with jobs primarily in the non-profit sector, earning on average (I'd guess) about $20,000/year
(15 870 Euros). Currently that's an unbelievable margin of nearly 150% over the 2008 US poverty threshold. (As if 2 people could live on $14,ooo a year.)

Anyway, I will discuss topics such as:
~ the liklihood of living in a box over a steam grate
~ where to get totally free prescriptions
~ how I learned to curb my shopping compulsions ("but it's on sale!" and "surely three are better than one!")
~ what it was like to apply for food stamps
~ where I've found delectable and occassionally designer garb super-cheap
~ ways I save cash without exerting much energy (I'm lazy, so no coupon -clipping here)
~ and much, much more.

So please tune in again as we begin our journey with a crash course in how I landed in NYC making $225/week at a major Manhattan Museum--hey, I work on Madison Avenue, y'all!--and trying to pay rent on a nice Hoboken apartment. (Well, it was a very nice apartment, just not on the nice side of Hoboken...)